Drugs, Prostitution worth Â£10bn to British Economy

The inclusion of illegal activities such as prostitution and drugs into national accounts would add about 10 billion pounds (12.3 billion euros, $16.7 billion) to national output, Britain’s statistics office said on Thursday.

In a paper in which it estimated prostitutes’ “sales” and costs incurred — condoms and “working clothes”– the Office of National Statistics (ONS) said the inclusion of such activities was part of a raft of improvements to the way the economy will be measured from September.

The adjustments bring Britain’s estimates of Gross Domestic Product — or national economic output — more into line with other European countries, where some activities such as prostitution or the trade in certain drugs are not illegal.

The ONS estimates of illicit revenues are based on 2009 data, the latest it says it are available, and could help bolster arguments for the reform of drug and prostitution laws.

Prostitution itself is not illegal in Britain, but activities surrounding the trade, such as keeping a brothel, are, prompting critics to call for an overhaul of what they see as muddled rules.

Similarly, calls have mounted in Britain for the partial legalisation of some drugs, both to curb the crime associated with prohibition and also to boost tax revenues as the government tries to plug a big budget deficit.

“As economies develop and evolve, so do the statistics we use to measure them,” ONS Chief Economic Adviser Joe Grice said in a statement.

The statistical body said estimating revenues and costs incurred in illicit activities had been difficult, and that they had based some assumptions on data from other studies or on police figures.

Statisticians estimated that there are 58,000 prostitutes in the country seeing up to 30 clients a week each, and assumed that the only drug produced in Britain is cannabis.

Other drugs included in their calculations were crack cocaine, powder cocaine, heroin, ecstasy and amphetamines.

Overall, adjustments to the way Britain’s national accounts are reviewed, including measures such as looking at revenues from non-profit institutions, would have boosted 2009 GDP by between four and five percent.

Other illicit activities that could be included in future accounting are the handling of stolen goods, illegal gambling, and the copying of software, games, movies and music, the ONS said.